The existence of acknowledged debts under garnishee proceedings allows enforcement despite pending counterclaims.

[1] This appeal relates to the enforcement of a judgment debt of the sum of RM12,117,646.88 which is due and owing from the judgment debtor, Ibsul Holdings Sdn Bhd ["JD"] to the appellant. The appellant sought to enforce the judgment debt through garnishee proceedings under O 49 of the Rules of 2012. The learned Judge allowed the respondent's appeal against the order of the learned SAR who had granted a garnishee order absolute on 11 January 2016. Upon proper consideration, we unanimously allowed the appeal, set aside the decision of the High Court and reinstated the decision of the learned SAR. These are our reasons in full.

Brief Facts

[2] The appellant had granted the JD various banking facilities in consideration of which the JD executed a deed of assignment dated 15 October 2002 [deed]. By this deed, the JD assigned to the appellant all monies due and payable to the JD under a contract between the JD and the respondent relating to a project to build a water treatment plant in Jelutong, Penang. The JD notified the respondent of the assignment by way of Notice of Assignment cum Irrevocable Instruction dated 22 February 2005.

[3] When the JD defaulted on the arrangements relating to the banking facilities, the appellant sued the JD. A consent judgment was entered on 10 February 2012. The JD made some payments but then defaulted. As at 13 August 2015, the sum outstanding under the consent judgment was RM57,507,246.95.

[4] The appellant commenced garnishee proceedings seeking to garnish the sum of RM3,892,016.77 pursuant to Interim Certificates Nos. 12, 14, 15, 16 and 26 as well as a sum of RM12,117,646.88 stated in the respondent's letter dated 25 October 2007 ["25 October 2007 letter"]. In the 25 October 2007 letter, the respondent is said to have confirmed and acknowledged that it, the respondent, owed the JD a sum of RM12,117,646.88 on account of concluded works on variation orders. The learned SAR granted a garnishee absolute order.

Decision Of The High Court

[5] This order absolute was set aside on appeal by the learned High Court Judge on the primary ground that at the material time, there was no conclusive debt already in existence or accrued from the respondent to the JD. Her Ladyship reached this conclusion based on her interpretation and construction of the 25 October 2007 letter. It was the Court's view that such letter was not evidence of a conclusive debt because there was no acceptance by the JD; and because there was a counterclaim by the respondent which was pending in arbitration between the respondent and the JD. Until the arbitration yielded an award, there was no legal debt due and accruing from the respondent to the JD. Her Ladyship also rejected the appellant's contention that Interim Certificate No. 27 which showed that the JD is indebted to the respondent in the sum of RM11,105,662.83 had been superseded by the 25 October 2007; taking the view that an interim certificate can only be superseded by another subsequent interim certificate. According to her Ladyship, the interim certificate "cannot be superseded by a letter written by one party which has not been accepted by the other party." In fact, it was the Court's view that the application was "premature."

Our Decision

[6] With respect, we disagree. Order 49 of the Rules of 2012 provides for the attachment of debt due to a judgment debtor. It reads as follows